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PH seeks additional compliance review in cigar dispute vs Thailand

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By Bernie Cahiles-Magkilat

The Philippines has asked WTO for another review of Thailand’s compliance with its  ruling five years ago directing the latter to correct the unfair tax treatment it imposed on cigarettes imported from the Philippines.

The Philippines request on July 4, 2017 was circulated to WTO members on July 6, 2017 to the Thailand delegation and to the chairperson of the WTO Dispute Settlement Body. This is the second request regarding implementation by Thailand of recommendations included in the original panel and Appellate Body reports in “Thailand – Customs and Fiscal Measures on Cigarettes from the Philippines” (DS371).

In its filing, the Philippines said it looks forward to Thailand’s response to this request, and to holding consultations within 15 days.

The Philippines reserves all of its rights in respect of Thailand’s compliance with its WTO obligations in this dispute.  It also reserves its rights to raise additional factual and legal claims during the course of the consultations and in any request for the establishment of a panel.

A compliance panel had already been established in regard to the measures cited by the Philippines in its first request but which the Philippines found Thailand unresponsive in heeding to implement the WTO ruling to impose the same tax treatment on imported cigarettes from the Philippines with that of the cigarettes produced in Thailand.

WTO said that when the parties disagree on whether the implementation of the recommendations and rulings has been carried out, a panel under Article 21.5 of the DSU (Dispute Settlement Understanding) can be established to rule on compliance.

Instead of complying with the WTO ruling to impose the same tax treat to the imported cigarettes from the Philippines with that of the Thai produced cigarettes, the Thai government filed in January, 2016 a case versus Philip Morris Thailand Limited on alleged undervaluation of imported cigarettes from the Philippines to avoid paying taxes.

Based on the alleged “actual” prices, the 2002-2003 Charges and annex specify that the duty-paid value of the cigarettes imported by PM Thailand is THB 4,953,456,655.93 or more than $145 million.

In its new filing, the Philippines raised the 14 points of inconsistencies on the part of Thailand based on the July 15, 2011 DSB ruling that it adopted from the Appellate Body Report.

In these reports, various Thai measures were found to be inconsistent with provisions of the GATT 1994 and the Customs Valuation.

These inconsistencies include Thai Customs rejection of the declared transaction values and its failure to adequate explanation in determining the customs values for the imported cigarettes, and failure to communicate the relationship between Thai PM and Philippines PM.

The Philippines also said that Thailand acted inconsistently with Article X:3(b) of the GATT 1994 by failing to maintain or institute independent review tribunals or procedures for the prompt review and correction of guarantees collected pending the determination of customs value.

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